BID Mythbusting

Over the course of this year, and, in fact, going back to every BID development we have been involved with, there have always been questions, comments and opinions of BIDs that are often just wrong.

These come from a simple lack of knowledge, from a misunderstood interpretation of something that someone has been told and, occasionally, from a deliberate unwillingness to understand the facts.

When faced with a room full of businesses who are just embarking on their town’s BID journey, confusion about what BIDs are and how they work are entirely understandable and, in fact, it is fundamental to the way that Revive & Thrive approaches new BID developments that we bring businesses together in this way to debunk the BID myths that some businesses have.

One of the key challenges, though, is to reach those business owners who don’t come to meetings and who will continue to misunderstand the facts. Of course, we do that – in partnership with local authorities and BID steering groups – in a number of ways, from newsletters to face-to-face consultations and other channels of communication at our disposal, but we are aware that if someone doesn’t want to be convinced of the benefit a BID can bring, it’s a very hard journey to bring them along on.To help address this, we have put together a list of the many myths about BIDs that we have been faced with over the years and have responded to them as objectively and factually as is possible.

Have a look over our comprehensive list now:

Myth: This is just an extra business rates tax

Fact: It is a statutory payment, yes, but unlike business rates, 100% of BID levies collected are returned to the local area to be spent on predefined and agreed projects. If you view the levy as an investment rather than a tax, you’re more likely to get a return on it.

Myth: If you don’t vote it’s counted as a “yes”

Fact: An abstention (not voting) is not counted as a vote at all. However, the lower the turnout, the higher the impact of a small number of votes – either for or against the BID.

Myth: It’s a stealth tax

Fact: The BID levy is a statutory payment, so yes, it can be classed as a tax. Unlike taxes, though, BIDs offer those that pay into them tangible opportunities to recoup their investments.

Also, there is nothing “stealthy” about them. The amounts that businesses have to pay are clear, transparent and unchangeable for the duration of a BID term.

Myth: I voted no so I don’t have to pay

Fact: Every eligible business has to pay, there are no exceptions. If you voted no, but the majority vote was positive, you have to pay, the same as everyone else.

Myth: It’s not a democratic process

Fact: BID ballots in the UK are run in the same way as all public elections with a straightforward majority required (albeit the majority needs to be both in number and aggregate rateable value). Only those expected to pay are entitled to vote as it is they who will be financing the BID. The vote is a simple yes/no vote and voters make their decision based on the content of a business plan or set of BID proposals, which would have been consulted upon before ballot papers are sent out.

Myth: The BID is just doing what the council should be doing

Fact: BIDs only provide new or enhanced services. Anything “enhanced” is founded upon a baseline statement provided by the public sector provider before the vote takes place.

In terms of what the council “should be doing”, the list of services that they are required by law to provide is actually very limited and the reality is that with ever-reducing budgets, the non-essential services (especially those that benefit businesses over residents) are the first to go.

Myth: Our levy is just paying to employ someone

Fact: Most BIDs employ someone or a small team of people to manage and deliver the projects in the business plan. Where BIDs have chosen not to go down this route, not only are projects not managed anywhere near as effectively, but there is nobody to “champion” the BID and its businesses with external stakeholders.

Myth: It’s too late our place is already ruined

Fact: Whilst it is fair to say that expectations need to be managed, an injection of cash that a BID brings can only serve to improve an area. Moreover, many national retailers will actively choose to locate into an area with a BID over one without as they know they are bringing their brand to an area with a management structure in place.

Myth: If I ignore it, it will go away

Fact: It won’t, at least not until the end of its current term at the earliest. You can ignore the BID, but levy payments are managed by the local billing authority and they pursue non-payments in the same way that they do for business rates.

Plus, by ignoring it, you’re missing out on the many opportunities to get a benefit from it!

Myth: My vote doesn’t count

Fact: Actually, your vote in a BID ballot counts far more than votes you may cast for local or national elections. The average BID has around 400 levy payers, that means 400 votes. Average turnout is around 50% – that means 200 votes. In that scenario, 101 yes votes would see a BID adopted (assuming that the aggregate rateable value is in the majority too). If your vote is the one hundred and first, that makes a significant difference.

Remember, BID ballots are successful with a majority by number and a majority by rateable value. This is precisely so that a small number of small businesses can’t force through a BID if bigger businesses don’t want one, but equally it means that a small number of large businesses can’t force a BID through if smaller businesses don’t want it.

Myth: How can my business influence change? The big businesses will ride rough shod over the BID

Fact: Again, this is about 1-property, 1-vote. Your voice counts as much as that of the biggest levy payer in your BID area.

In fact, most BID Boards are made up in the main of independent and local business owners. If you are one of those, you could have a direct influence in what the BID does, both in terms of the projects it delivers and the influence it brings to bear on public sector partners.

Myth: I’m a charity which doesn’t pay business rates so I don’t have to pay the BID levy

Fact: Every BID sets its own rules about who is and isn’t eligible to pay, but simply being a charity is highly unlikely to be one of those rules. Put simply, if your charity is operating in a property which has a rateable value that meets your particular BID’s eligibility criteria, and if it is carrying out some kind of commercial activity, it is likely to be included. You’ll need to check though and can’t afford to assume that you don’t have to pay.

Myth: BID Directors are lining their pockets

Fact: They’re not. BID Directors are mostly running or managing their own businesses and give up their time voluntarily to ensure that the BID delivers the best possible value for money for its levy payers.

Myth: The BID knows how everyone voted

Fact: They don’t. BIDs or BID proposers will often be made aware of who has voted in a BID ballot, but never how they may have voted. This is simply to assist with the canvassing process so that time is not wasted on visiting businesses which have already voted and can be concentrated on maximising the number of votes cast.

Myth: I get relief on my business rates so should get relief on my BID levy

Fact: Same principle as with charities (above). Whilst your BID levy is calculated based on your property’s rateable value, it is nothing to do with your business rates bill and any exemptions or reliefs you may recieve on that.

Myth: Can I choose not to be a part of it, to opt out?

Fact: Unfortunately, not. If you meet the eligibility criteria that your BID has set, there is no opportunity to opt out – you may as well make the most of it!

Equally, you are still liable for the BID levy if you move into an eligible property after the BID has already started, even though you didn’t have the opportunity to vote in the BID ballot.

Myth: Those who pay most get more of a say

Fact: A similar myth to big businesses riding rough shod over smaller ones. In actual fact, those that have the biggest say are those who get involved, whatever the size of their business.

Myth: The council don’t have to pay the levy on their properties

Fact: While this is possible, and is actually the case in some places, in the overwhelming majority of BIDs, councils and other public sector bodies pay in exactly the same way as every other levy payer.

Many councils also pay additional sums into BIDs, via service level agreements for specific projects or as a way of contributing financially in an area’s development.

Increasingly, councils are seeking to recoup what it costs them to collect the BID levy. Whilst the charges may seem high, industry standard best practice dictates that this charge shouldn’t be any higher than 3% of the BID’s income or £35 per property. Where that isn’t the case, feel free to challenge your BID to do better!

Myth: We don’t want anything that will attract competition for my business to the area

Fact: Competition is a healthy thing for any business and if businesses are moving in, surely it means the area is improving, benefiting all businesses as well as those that use them.

Myth: The council don’t have to pay the levy on their properties

Fact: While this is possible, and is actually the case in some places, in the overwhelming majority of BIDs, councils and other public sector bodies pay in exactly the same way as every other levy payer.

Many councils also pay additional sums into BIDs, via service level agreements for specific projects or as a way of contributing financially in an area’s development.

Increasingly, councils are seeking to recoup what it costs them to collect the BID levy. Whilst the charges may seem high, industry standard best practice dictates that this charge shouldn’t be any higher than 3% of the BID’s income or £35 per property. Where that isn’t the case, feel free to challenge your BID to do better!

Myth: If Tesco vote against it, it won’t happen

Fact: Well, for starters, Tesco’s are incredibly supportive of BIDs, but as the UK’s largest private sector levy-payer, BIDs cost them millions of pounds each year and they simply want to make sure that they, like every other levy payer, are getting value for money.

That said, it’s not unreasonable to assume that if any national or large business looks at a BID business plan and can clearly see that they are only included in it to inflate a BID’s income, they may well vote against it, and understandably so.

And don’t forget that whilst the value of a big retailer’s vote will be higher, it’s still only one vote. A rateable value no vote worth £1,000,000 is easily counteracted by 10 x £100,000 yes votes.

Myth: My business doesn’t rely on footfall, so why should I pay for it?

Fact: Most BIDs, especially those operating in town or city centres, will have some kind of focus around increasing footfall. This is normal as it’s an easy and obvious way to provide a return on investment for a large section of levy-payers.

But even BIDs that spend the majority of their time and resource on footfall generating activities will be doing more to support businesses that are not footfall-reliant. Read your BID’s business plan and see what it says it will do for you (it’ll be in there).

Plus, a town or city centre environment that has lots going on, is busy and feels like a fun place to be is going to be a benefit for every business – even if you can’t directly relate that back to your bottom line.

Myth: We can start a petition to shut the BID down

Fact: Well, you could, but you’d still have to pay the levy.

The local billing authority (council) is required by law to collect the BID levy for the duration of its term. If the BID company closed down, the levy would still be collected and would most likely be passed to a new company that would be set up to do exactly what the company you’ve just had closed down was doing. Seems like a bit of a waste of time and energy.

Myth: The funding that was given to develop the BID has to be repaid. This means that businesses which are already struggling are just paying back the costs of devleoping the BID

Fact: The are a range of mechanisms for funding a BID development. Some of those do include loan-funding which is generally repaid over the BID’s first term. However, as all businesses which pay a levy do so proportionately, the cost to a business with a small rateable value is much less than it is to a large business.

Myth: In developing the BID, only those businesses that were in favour of it were consulted.

Fact: A well-managed BID development should seek to include every business that will be required to pay the levy, but even if you consider this not to have been the case, you still have the opportunity to vote against it.

Part of the legal requirement for developing a BID is for the BID proposers (usually a steering group) to set out to the local council how it has carried out business engagement. The council has the opportunity to veto a BID’s proposals if it considers that the consultation has not been robust enough.

Myth: All that’s needed here is free car-parking. That will sort everything out so we don’t need a BID.

Fact: Apart from the reality of the matter that car-parking charges generate valuable revenue for local councils (irrespective of where or how that money is spent), free car-parking is not necessarily the panacea that many people think it is. Consider this: people will happily pay more to park in a big city than a small village. Why is that? It’s primarily for what they plan to experience when they leave the car park.

Car-parking is one of the most emotive and contentious issues facing town and city centres and there is simply no one-size fits all solution. A convenience store and a tattoo parlour next door to each other will have significantly different thoughts on car parking. One wants high turnover of spaces, the other would prefer long-stay.

The role that BIDs can play with respect to car-parking is to ensure that strategies, policies and charges put in place by a council are properly considered, appropriate and take best account of the views of the business community.

In addition to this, BIDs do so much more that benefit so many businesses that car-parking can become less of a primary concern.

Myth: A BID nearby has failed so a BID will fail here.

Fact: All BIDs are different and some are better than others, but this is for a myriad of reasons. Another BID may have been too ambitious with its plans, may not have consulted properly or may have had legitimate reasons for not being successful.

When considering your BID, be realistic with what you hope to achieve, plan and consult properly, build a business plan with solid objectives and properly costed projects that can inspire and enthuse your business community and you will have no reason to believe that a BID in your town will fail.

Myth: Businesses below the minimum threshold will miss out and it’s not their fault.

Fact: Most BIDs will set a minimum rateable value threshold for purely economic reasons. Below a certain value, it is simply not cost-effective to collect the levy. However, any business can apply to become a voluntary member and get all the benefits that a levy-paying business receives, with the exception of being able to vote in the ballot.

Moreover, businesses that are too small to pay the levy but which are situated within the BID boundary are inevitably going to reap some benefits purely by dint of their geography. Cleaner streets, greater footfall, more influence with the public sector and more are all things that every business within a BID area can benefit from, whether they pay a levy or not.

Myth: I heard about a BID that got a yes vote with just a 15% turnout. How is this representative?

Fact: It is true that there is no minimum turnout requirement for BID ballots (as with any other elections in the UK), but this is something that many experts within the industry are lobbying to change.

Anyone who has worked with or for a BID knows that the lower the turnout at ballot, the harder it is for the BID to win the trust of its levy-payers, which is why a good development and ballot process should seek to engage with every business.

Myth: I might as well close my business for the day when the BID puts an event on. People aren’t coming in to town to shop and the stalls outside my business mean that my customers can’t even get in.

Fact: Everything a BID does should be designed to secure a return on investment for its levy-paying businesses and while not every business will benefit from every project, sometimes businesses need to think creatively about benefiting from what the BID is doing.

In this example, the business owners could be giving out vouchers for use at a later date, thus encouraging repeat visits or even taking a stall at the event and promoting what they do in a different way.

Myth: A BID is no more than a mechanism for privatising the high street and taking control of essential services.

Fact: As we have already pointed out, BIDs can only provide additional products and services but there is a strong argument that a BID, as a lean, private-sector organisation led by experienced business people, can provide services that are traditionally in the public-sector domain more quickly, more cheaply and to a higher standard.

That said, compared to county, district, town and even parish councils, BIDs have far smaller budgets and a far narrower constituent base, so privatisation simply isn’t an option.

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